According to FHFA, Morgan Stanley sold $10.58 billion in
mortgage-backed securities to Fannie Mae and Freddie Mac during
the credit boom, while presenting “a false picture” of the loans’
risks.

The Morgan Stanley settlement with the FHFA will be the
third-largest against a Wall Street firm, with the authority
having filed a total of 18 cases overall, the Wall Street Journal
reports.

JP Morgan has so far paid the biggest fine of $4 billion, with
Deutsche Bank second with a $1.93 billion bill.

In a fresh settlement JPMorgan agreed to pay $614 million for
violating the False Claims Act, as the bank originated and acted
as an underwriter for non-compliant mortgage loans submitted for
insurance coverage and guarantees by US federal agencies.

“JPMorgan Chase put profits ahead of responsibility by
recklessly churning out thousands of defective mortgage loans,
failing to inform the government of known problems with those
loans and leaving the government to cover the losses when the
loans defaulted,” as the New York Times quotes Preet
Bharara, the United States Attorney in Manhattan.

JPMorgan had set aside reserves for the penalties, saying in a
statement, “the settlement represents another significant
step in the firm’s efforts to put historical mortgage-related
issues behind it.”